The SBTi Is No Longer Fit For Purpose 

“The slinking exodus from SBTi’s framework is not necessarily a failure of corporate ambition. Rather, it is an indication that the existing model is too rigid to function in the real world, and always was,” writes Chris Hocknell.

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The Science-Based Targets initiative (SBTi) was once the gold standard for corporate climate action. It provided businesses with a structured framework to align their decarbonization strategies with the Paris Agreement, promising an approach to net zero that was both science-based and credible. However, rather predictably, cracks have started to appear.

Increasingly, companies are quietly withdrawing from their SBTi commitments, raising a fundamental question: is the net-zero model still fit for purpose? 

The idea of “corporate net zero” has always been aspirational. The reality is that most business models rely on increasing growth – increasing production, or sales, or both necessitates increased input. Whether that is literal energy in manufacturing, or other forms of increasing energy usage – through expanding offices, for example – growth will always be almost impossible to align with the prevailing ideal of “net zero”.

Recent data supports this. For many businesses, net zero is not just hard; it is proving to be practically unachievable. 

A 2024 analysis of 1,883 international firms found that 36% of them were already failing to meet their Scope 1 and 2 reduction targets, while 51% were struggling with Scope 3 emissions. Similarly, a 2024 report by Funds Europe’s Carbon Impact Research revealed that nearly half of asset managers have failed to disclose their SBTi allocations.

So, why are companies abandoning their commitments? 

The answer lies in a mix of political pressures, economic realities, and the diminishing returns of emissions reduction efforts. 

Of course, the political mood that has swept across the world in the wake of Donald Trump’s election has hardly helped to drive the corporate decarbonization agenda. Trade wars, high inflation and high interest rates have made further investments in next-generation clean technologies far less feasible. 

Yet the slowdown also reflects far more fundamental hurdles for companies. SBTi’s requirement for a 90% absolute reduction across Scope 1, 2, and 3 emissions is proving unworkable. 

In reality, businesses have already implemented the low-hanging fruit. Cost-effective and easy-to-implement measures such as energy efficiency improvements and renewable energy sourcing make economic sense for businesses to adopt: they could end up saving them money, as well as saving their carbon budget.

Yet, the deeper the carbon cuts get, the more expensive they are, and the returns they deliver are ever more diminishing. 

Of course, some businesses remain wary of regulatory flip-flopping, and prefer to “green-hush”: continuing their internal sustainability efforts but avoiding public commitments. Staying silent makes these companies indistinguishable from those that simply drop their commitments. Meanwhile, the global economic headwinds of high interest rates and capital constraints are making large-scale investment in clean technology less viable.

This tension is evident in the energy sector, where rising fossil fuel prices and geopolitical instability are forcing companies to rethink their commitments. 

BP, for example, recently scrapped its target to cut fossil fuel output by 40%, choosing instead to reinvest in oil and gas. Similarly, Shell abandoned its Scope 3 emissions reduction target under shareholder pressure, admitting that profitability takes precedence over climate pledges. 

But this slowdown extends far beyond the energy sector. As a result of the incomprehensible complexity of reducing Scope 3 emissions, both Unilever and Procter and Gamble have both failed to submit their validated climate targets. 

SBTi’s Downfall

One of the most astonishing shifts has been in the tech sector. Microsoft, an early and high-profile supporter of SBTi, has been removed from the list, along with Amazon and Netflix. 

This dovetails with the rising energy intensity of artificial intelligence and data centres. Given the eye-watering energy demand of these new data centres, we see for the first time in history that private companies like Google, and not governments, are investing in their own nuclear reactors. 

At its core, the SBTi framework fails to account for economic and technological constraints. 

By demanding absolute emissions reductions with little room for flexibility, it forces businesses into an all-or-nothing scenario. The result? Companies quietly exit rather than risk reputational damage by publicly failing to meet their targets. This approach ultimately undermines corporate engagement in climate action.

Instead of insisting on an inflexible net-zero model, businesses should be encouraged to pursue a more pragmatic approach, one that acknowledges the reality of hard-to-abate emissions and allows for a more strategic allocation of resources.

The solution may lie in advocating for some form of carbon neutrality in the short to medium term rather than a rigid net-zero pathway.

While SBTi purists dismiss carbon neutrality as insufficient, it does offer a viable way for businesses to maintain climate commitments without jeopardizing financial stability. By investing in high-quality carbon credits and offsetting unavoidable emissions, companies can still drive meaningful climate action while keeping their operations viable. 

Carbon credits have suffered a fair few blows in the press in recent years. But verification and quality procedures that underpin carbon credits have started to improve thanks to a series of interventions. Companies shouldn’t be scared to use them, especially when the world is in such desperate need of climate finance.  

A carbon neutral pathway also allows private funds to be funnelled to those projects around the world that support not only carbon sequestration but also natural regeneration and the loss of biodiversity. Given that intergovernmental summits have repeatedly failed to deliver the necessary climate finance these projects so desperately need, companies must be given license to step in. 

Critical Decade Ahead

The next decade is critical for corporate decarbonization. Momentum must be maintained, even through the political and economic forces acting against it. 

A carbon neutral approach – one that enables offsetting while still seeking ambitious emissions cuts where possible – could prevent a full-scale retreat from climate action.

The slinking exodus from SBTi’s framework is not necessarily a failure of corporate ambition. Rather, it is an indication that the existing model is too rigid to function in the real world, and always was.  

Instead of clinging to an unattainable net-zero target, companies should be encouraged to pursue more pragmatic decarbonization strategies. By integrating carbon neutrality or other better suited approaches into their sustainability frameworks, they can continue making progress without being forced into an unrealistic and ultimately self-defeating race to net zero.

The corporate world needs a climate strategy that works. Perhaps, paradoxically, stepping away from SBTi might be the first step toward a more effective, long-term solution for emissions reduction.